Reiterates Outlook for Full Year
2024
Traeger, Inc. ("Traeger" or the "Company") (NYSE: COOK), creator
and category leader of the wood pellet grill, today announced its
financial results for the three months ended March 31, 2024.
First Quarter FY 24 Highlights
- Total revenues decreased 5.4% to $144.9 million, at the
higher-end of guidance of $140 million to $145 million
- Gross margin of 43.2%, up 700 basis points compared to prior
year
- Net loss of $4.7 million; net loss of $0.04 per share
- Adjusted net income of $4.7 million; adjusted net income of
$0.04 per share
- Adjusted EBITDA of $24.4 million, up 11.2% compared to prior
year
- Reiterates FY 2024 guidance
"In the first quarter, we executed on our plan and delivered
revenue and Adjusted EBITDA results at the high-end of our guidance
range," said Jeremy Andrus, Chief Executive Officer of Traeger. "As
we anticipated, consumer demand for grills remained soft in the
first quarter. Despite facing a challenging demand backdrop for our
category, our first quarter results demonstrate our commitment to
financial and operational improvement, and we reported our highest
quarterly gross margin since being a public company. Our team is
highly focused on execution as we head into the peak selling season
for the grill category and we remain committed to our long-term
strategic goals of driving household penetration and innovation. I
continue to believe that we are positioned for strong long-term
growth as the demand environment normalizes over time."
Operating Results for the First Quarter
Total revenue decreased by 5.4% to $144.9 million,
compared to $153.2 million in the first quarter last year.
- Grills decreased 14.4% to $76.8 million as compared to the
first quarter last year. The decrease was driven by a decline in
average selling price and a reduction in unit volume.
- Consumables increased 7.4% to $32.3 million as compared to the
first quarter last year. The increase was driven by higher unit
volume of food consumables and wood pellets, partially offset by a
reduction in average selling price of food consumables.
- Accessories increased 7.4% to $35.8 million as compared to the
first quarter last year. This increase was driven primarily by
higher sales of MEATER smart thermometers.
North America revenue declined 9.1% in the first quarter
compared to the prior year. Rest of World revenues increased 31.1%
in the first quarter compared to the prior year.
Gross profit increased to $62.6 million, compared to
$55.4 million in the first quarter last year. Gross profit margin
was 43.2% in the first quarter, compared to 36.2% in the same
period last year. The increase in gross margin was driven primarily
by favorability from freight and logistics, pellet mill capacity
optimization, and favorable foreign exchange rates.
Sales and marketing expenses were $21.7 million, compared
to $22.1 million in the first quarter last year. The decrease in
sales and marketing expense was driven by decreases in demand
creation costs, partially offset by increased employee
expenses.
General and administrative expenses were $32.1 million,
compared to $26.7 million in the first quarter last year. The
increase in general and administrative expense was driven by higher
stock-based compensation expense, higher employee expenses, and
higher occupancy expenses, partially offset by expenses relating to
the disposal of pellet mill assets in the comparable period.
Net loss was $4.7 million in the first quarter, or $0.04
per diluted share, as compared to net loss of $10.9 million in the
first quarter of last year, or $0.09 per diluted share.1
Adjusted net income was $4.7 million, or $0.04 per
diluted share as compared to adjusted net income of $1.2 million,
or $0.01 per diluted share in the first quarter last year.2
Adjusted EBITDA was $24.4 million in the first quarter as
compared to $21.9 million in the same period last year.2
Balance Sheet
Cash and cash equivalents at the end of the first quarter
totaled $23.6 million, compared to $29.9 million at December 31,
2023.
Inventory at end of the first quarter was $99.9 million,
compared to $96.2 million at December 31, 2023 and $132.4 million
at March 31, 2023.
Guidance For Full Year Fiscal 2024
The Company is reiterating its prior guidance for Fiscal 2024.
The Company's outlook reflects its expectation for continued
softness in grill industry demand in 2024, as well as its
expectation for significant improvement in gross margin, driven by
lower transportation costs and the benefit of margin enhancement
initiatives.
- Total revenue is expected to be between $580 million and
$605 million
- Gross margin is expected to be between 39% and 40%
- Adjusted EBITDA is expected to be between $62 million
and $71 million
A reconciliation of Adjusted EBITDA guidance to Net Loss on a
forward-looking basis cannot be provided without unreasonable
efforts, as the Company is unable to provide reconciling
information with respect to provision for income taxes, interest
expense, depreciation and amortization, other (income) expense,
stock-based compensation, non-routine legal expenses, change in
fair value of contingent consideration, and other adjustment items
all of which are adjustments to Adjusted EBITDA.
Conference Call Details
A conference call to discuss the Company's first quarter results
is scheduled for Wednesday, May 8, 2024, at 4:30 p.m. ET. To
participate, please dial (833) 470-1428 or +1 (929) 526-1599 for
international callers, conference ID 247499. The conference call
will also be webcast live at https://investors.traeger.com. A
recording will be available shortly after the conclusion of the
call. To access the replay, please dial (866) 813-9403, conference
ID 494048. A replay of the webcast will also be available
approximately two hours after the conclusion of the call on the
Company's website at https://investors.traeger.com. A supplemental
presentation has also been posted to the Company's website at
https://investors.traeger.com.
About Traeger
Traeger Grills, headquartered in Salt Lake City, is the creator
and category leader of the wood pellet grill, an outdoor cooking
system that ignites all-natural hardwoods to grill, smoke, bake,
roast, braise, and barbecue. In 2023, Traeger entered the griddle
category, further establishing its leadership position in the
outdoor cooking space. Traeger grills are versatile and easy to
use, empowering cooks of all skill sets to create delicious meals
with flavor that cannot be replicated. Grills are at the core of
our platform and are complemented by Traeger wood pellets, rubs,
sauces, accessories, and MEATER smart thermometers.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including, without limitation,
statements regarding our anticipated full year fiscal 2024 results.
These statements are neither promises nor guarantees, but involve
known and unknown risks, uncertainties and other important factors
that may cause our actual results, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements, including, but not limited to, our history of operating
losses, our ability to manage our future growth effectively, our
ability to expand into additional markets, our ability to maintain
and strengthen our brand to generate and maintain ongoing demand
for our products, our ability to cost-effectively attract new
customers and retain our existing customers, our failure to
maintain product quality and product performance at an acceptable
cost, the impact of product liability and warranty claims and
product recalls, the highly competitive market in which we operate,
the use of social media and community ambassadors, issues in
relation to environmental, social and governance matters, both in
relation to our own operations and the operations of our supply
chain partners, a decline in sales of our grills, our dependence on
three major retailers, risks associated with our international
operations, our reliance on a limited number of third-party
manufacturers and problems with (or loss of) our suppliers or an
inability to obtain raw materials, and the ability of our
stockholders to influence corporate matters and the other important
factors discussed under the caption "Risk Factors" in our periodic
and current reports filed with the Securities and Exchange
Commission from time to time, including our Annual Report on Form
10-K for the year ended December 31, 2023. Any such forward-looking
statements represent management's estimates as of the date of this
press release. While we may elect to update such forward-looking
statements at some point in the future, we disclaim any obligation
to do so, even if subsequent events cause our views to change.
TRAEGER, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
and per share amounts)
March 31, 2024
December 31,
2023
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$
23,620
$
29,921
Accounts receivable, net
79,049
59,938
Inventories
99,902
96,175
Prepaid expenses and other current
assets
27,971
30,346
Total current assets
230,542
216,380
Property, plant, and equipment, net
40,725
42,591
Operating lease right-of-use assets
46,985
48,188
Goodwill
74,725
74,725
Intangible assets, net
460,069
470,546
Other non-current assets
9,040
8,329
Total assets
$
862,086
$
860,759
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable
$
25,890
$
33,280
Accrued expenses
46,144
52,941
Line of credit
40,635
28,400
Current portion of notes payable
250
250
Current portion of operating lease
liabilities
3,594
3,608
Current portion of contingent
consideration
15,000
15,000
Other current liabilities
998
495
Total current liabilities
132,511
133,974
Notes payable, net of current portion
397,586
397,300
Operating lease liabilities, net of
current portion
28,472
29,142
Deferred tax liability
8,244
8,236
Other non-current liabilities
648
759
Total liabilities
567,461
569,411
Commitments and contingencies—See Note
10
Stockholders' equity:
Preferred stock, $0.0001 par value;
25,000,000 shares authorized and no shares issued or outstanding as
of March 31, 2024 and December 31, 2023
—
—
Common stock, $0.0001 par value;
1,000,000,000 shares authorized
Issued and outstanding shares -
127,946,998 and 125,865,303 as of March 31, 2024 and December 31,
2023
13
13
Additional paid-in capital
945,370
935,272
Accumulated deficit
(659,560
)
(654,877
)
Accumulated other comprehensive income
8,802
10,940
Total stockholders' equity
294,625
291,348
Total liabilities and stockholders'
equity
$
862,086
$
860,759
TRAEGER, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
(in thousands, except share
and per share amounts)
Three Months Ended March
31,
2024
2023
Revenue
$
144,914
$
153,161
Cost of revenue
82,351
97,738
Gross profit
62,563
55,423
Operating expenses:
Sales and marketing
21,679
22,075
General and administrative
32,138
26,679
Amortization of intangible assets
8,819
8,889
Change in fair value of contingent
consideration
—
1,043
Total operating expense
62,636
58,686
Loss from operations
(73
)
(3,263
)
Other income (expense):
Interest expense
(8,096
)
(8,081
)
Other income, net
3,676
578
Total other expense
(4,420
)
(7,503
)
Loss before provision for income taxes
(4,493
)
(10,766
)
Provision for income taxes
190
164
Net loss
$
(4,683
)
$
(10,930
)
Net loss per share, basic and diluted
$
(0.04
)
$
(0.09
)
Weighted average common shares
outstanding, basic and diluted
125,196,934
122,699,114
Other comprehensive income (loss):
Foreign currency translation
adjustments
$
87
$
(32
)
Change in cash flow hedge
—
(2,088
)
Amortization of dedesignated cash flow
hedge
(2,225
)
(2,373
)
Total other comprehensive loss
(2,138
)
(4,493
)
Comprehensive loss
$
(6,821
)
$
(15,423
)
TRAEGER, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three Months Ended March
31,
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$
(4,683
)
$
(10,930
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation of property, plant and
equipment
3,619
3,564
Amortization of intangible assets
10,629
10,638
Amortization of deferred financing
costs
504
534
Loss on disposal of property, plant and
equipment
407
1,870
Stock-based compensation expense
10,098
7,943
Unrealized loss (gain) on derivative
contracts
(1,124
)
1,698
Amortization of dedesignated cash flow
hedge
(2,225
)
(2,373
)
Change in fair value of contingent
consideration
—
1,043
Other non-cash adjustments
557
45
Change in operating assets and
liabilities:
Accounts receivable
(19,110
)
(57,145
)
Inventories
(3,727
)
21,090
Prepaid expenses and other current
assets
3,071
(1,214
)
Other non-current assets
37
18
Accounts payable and accrued expenses
(10,651
)
(73
)
Other non-current liabilities
—
(298
)
Net cash used in operating activities
(12,598
)
(23,590
)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and
equipment
(5,683
)
(2,082
)
Capitalization of patent costs
(152
)
(123
)
Proceeds from sale of property, plant, and
equipment
83
2,450
Net cash provided by (used in) investing
activities
(5,752
)
245
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on line of credit
21,000
62,200
Repayments on line of credit
(8,765
)
(62,500
)
Repayments of long-term debt
(63
)
(51
)
Principal payments on finance lease
obligations
(123
)
(127
)
Net cash provided by (used in) financing
activities
12,049
(478
)
Net decrease in cash, cash equivalents and
restricted cash
(6,301
)
(23,823
)
Cash, cash equivalents and restricted cash
at beginning of period
29,921
51,555
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
AT END OF PERIOD
$
23,620
$
27,732
TRAEGER, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
(Continued)
Three Months Ended March
31,
2024
2023
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for
interest
$
9,659
$
4,718
Income taxes paid (received), net of
refunds
$
(516
)
$
470
NON-CASH FINANCING AND INVESTING
ACTIVITIES
Equipment purchased under finance
leases
$
12
$
72
Property, plant, and equipment included in
accounts payable and accrued expenses
$
523
$
2,568
TRAEGER, INC. RECONCILIATIONS OF AND
OTHER INFORMATION REGARDING NON-GAAP FINANCIAL MEASURES
(unaudited)
In addition to our results and measures of performance
determined in accordance with U.S. GAAP, we believe that certain
non-GAAP financial measures are useful in evaluating and comparing
our financial and operational performance over multiple periods,
identifying trends affecting our business, formulating business
plans and making strategic decisions.
Each of Adjusted EBITDA, Adjusted Net Income, Adjusted Net
Income per share, Adjusted EBITDA Margin, and Adjusted Net Income
Margin are key performance measures that our management uses to
assess our financial performance and is also used for internal
planning and forecasting purposes. We believe that these non-GAAP
financial measures are useful to investors and other interested
parties in analyzing our financial performance because it provides
a comparable overview of our operations across historical periods.
In addition, we believe that providing each of Adjusted EBITDA and
Adjusted Net Income, together with a reconciliation of Net Loss to
each such measure, and providing Adjusted Net Income per share,
together with a reconciliation of Net Loss per share to such
measure, and Adjusted EBITDA Margin and Adjusted Net Income Margin,
together with a reconciliation of Net Loss Margin to such measures,
helps investors make comparisons between our company and other
companies that may have different capital structures, different tax
rates, and/or different forms of employee compensation. For
example, due to finite-lived intangible assets included on our
balance sheet following our corporate reorganization in 2017, we
have significant non-cash amortization expense attributable to the
nature of our capital structure.
Each of Adjusted EBITDA, Adjusted Net Income, and Adjusted Net
Income per share are used by our management team as an additional
measure of our performance for purposes of business
decision-making, including managing expenditures, and evaluating
potential acquisitions. Period-to-period comparisons of Adjusted
EBITDA, Adjusted Net Income, and Adjusted Net Income per share help
our management identify additional trends in our financial results
that may not be shown solely by period-to-period comparisons of Net
Loss or Loss from Operations or Net Loss per share. In addition, we
may use Adjusted EBITDA in the incentive compensation programs
applicable to some of our employees. Each of Adjusted EBITDA,
Adjusted Net Income, and Adjusted Net Income per share has inherent
limitations because of the excluded items, and may not be directly
comparable to similarly titled metrics used by other companies.
The following table presents a reconciliation of Net Loss, Loss
from Operations, Net Loss Margin, Loss from Operations Margin, and
Net Loss per share, the most directly comparable financial measures
calculated in accordance with U.S. GAAP, to Adjusted Net Income,
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income Margin
and Adjusted Net Income per share, respectively, on a condensed
consolidated basis.
Three Months Ended March
31,
2024
2023
(dollars in thousands, except
share and per share amounts)
Net loss
$
(4,683
)
$
(10,930
)
Adjustments:
Other income (1)
(5,862
)
(1,359
)
Stock-based compensation
10,098
7,943
Non-routine legal expenses (2)
103
233
Amortization of acquisition intangibles
(3)
8,255
8,253
Change in fair value of contingent
consideration
—
1,043
Other adjustment items (4)
—
143
Tax impact of adjusting items (5)
(3,227
)
(4,094
)
Adjusted net income
$
4,684
$
1,232
Net loss
$
(4,683
)
$
(10,930
)
Adjustments:
Provision for income taxes
190
164
Interest expense
8,096
8,081
Depreciation and amortization
14,247
14,255
Other (income) expense (6)
(3,637
)
1,014
Stock-based compensation
10,098
7,943
Non-routine legal expenses (2)
103
233
Change in fair value of contingent
consideration
—
1,043
Other adjustment items (4)
—
143
Adjusted EBITDA
$
24,414
$
21,946
Revenue
$
144,914
$
153,161
Net loss margin
(3.2
)%
(7.1
)%
Adjusted net income margin
3.2
%
0.8
%
Adjusted EBITDA margin
16.8
%
14.3
%
Net loss per diluted share
$
(0.04
)
$
(0.09
)
Adjusted net income per diluted share
$
0.04
$
0.01
Weighted average common shares outstanding
- diluted
125,196,934
122,699,114
(1)
Represents realized and unrealized gains
on the interest rate swap, including amortization of dedesignated
cash flow hedge, losses on the disposal of property, plant, and
equipment, and unrealized gains (losses) from foreign currency
transactions and derivatives.
(2)
Represents external legal expenses
incurred in connection with the defense of a class action lawsuit
and intellectual property litigation.
(3)
Represents amortization of acquisition
intangibles includes amortization expense associated with
intangible assets recorded in connection with the 2017 acquisition
of Traeger Pellet Grills Holdings LLC.
(4)
Represents non-routine operational
wind-down costs.
(5)
Represents the tax effect of non-GAAP
adjustments calculated at an estimated blended statutory tax rate
of 25.6% and 25.2% for the three months three months ended March
31, 2024 and 2023, respectively. The amounts for the three months
ended March 31, 2023 have been adjusted to reflect the application
of the estimated blended statutory tax rates, as opposed to
effective income tax rates that was used in the prior period, in
order to include the current and deferred income tax expenses that
are commensurate with the non-GAAP measure of profitability.
(6)
Represents realized and unrealized gains
on the interest rate swap, losses on the disposal of property,
plant, and equipment, and unrealized gains (losses) from foreign
currency transactions and derivatives.
______________________________
1 There were no dilutive securities outstanding as of March 31,
2024 and 2023. 2 Reconciliations of GAAP to non-GAAP financial
measures, as well as definitions for the non-GAAP financial
measures included in this press release and the reasons for their
use, are presented below.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240508468906/en/
Investors: Nick Bacchus Traeger, Inc. investor@traeger.com
Media: The Brand Amp Traeger@thebrandamp.com
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